Mass Discovering the Process of Mass Customization

A951 9/l Discovering the Process of Mass Customization: A Paradigm Shift for Competitive Manufacturing INVESTIGATORS: L.J. Anderson (leader), E. L. Brannon, P.V. Ulrich, T. Marshall (Auburn); N. Staples (Clemson); B. Oliver (Colorado State); Pete Butenhoff (TC2); Marie Beninati (C.S.C Consulting) ABSTRACT: An unstable economic climate, changing consumer needs, and emerging technology have challenged the existing manufacturing paradigm of mass production. Companies can no longer continue to do business without considering the impact of the turbulence in the marketplace. The driving force in this new marketplace is the consumer. The driving factor is technology. This report discusses research to identify consumer wants, needs and interests in an emerging business opportunity in combining a mass production strategy with manufacturing and information technology to meet consumer desires with customized textile and apparel products. GOAL: The objective is to define and model mass customization by meshing consumers’ interests and concerns with industry’s potential to deliver customized textile and apparel products. INTRODUCTION: Mass customization is a broadly based term encompassing vast changes in manufacturing, distribution and delivery of products. First identified in Future Perfect, Davis (1987) based the oxymoron on the mass production of customized goods. The term has evolved along with significant enabling technologies to be viewed as a strategy that uses information technology to efficiently produce customized goods and services with maximum differentiation through low-cost production. Pine (1993) viewed mass customization, not as an extension or evolution in the history of mass production, but rather as a catastrophic shift or movement toward a totally new business paradigm. The impetus fueling this new paradigm is two fold. First, companies are being faced with competition in the marketplace and are looking for different business strategies to redefine themselves in this changing business environment. Secondly, linking and enabling technologies like faxes, modems, and kiosks now allow manufacturers to communicate better, faster, and more effectively with the consumer and within the organization. Manufacturers can now establish direct contact with consumers to learn what they desire in products. Enabling technologies like National Textile Center Annual Report: November 1996 21 A95-19/2 CAD/CAM, laser cutting, and body scanning allow manufacturers to cost effectively deliver lot sizes of one to meet consumer demand. The focus of this project has been to investigate the current status of mass customization in the textile and apparel industry and to discover the potential for mass customization to be utilized as a competitive business strategy by the entire integrated textile complex with a focus on the development of a consumer driven model. During the first year of the project there were two major thrusts: 1) to determine the level of market turbulence currently exhibited by firms in the textile and apparel industry, and 2) to determine consumer interest in participating in some level of mass customization of textiles or apparel products. Work in the second year of the project has involved data analysis in preparation of a national survey of consumer interest in participation in some level of mass customization. SUMMARY OF PROJECT APPROACHES: Focus Groups This project has used a variety of both quantitative and qualitative methodologies to investigate the phenomena of mass customization. The first research strategy in the primary phase of the research involved implementing a series of seven focus groups centered on stimulating discussion on the interest level and situation attributes of urban and rural and computer literate and non-computer literate women in various shopping scenarios design to investigate various levels of mass customization. Visual simulation of various shopping scenarios was used to launch discussion by participants. Focus groups were held in Atlanta, GA; Auburn, and Thomaston, AL. Each of the seventy focus group participants responded to a questionnaire designed to identify interest in mass customization. Two sticker projects were completed by focus group participants during each of the focus group sessions. One was used to assess the most important decision attributes for consumers when selecting apparel in various retail venues and the other investigated the participant’s ideal shopping experience for various apparel categories. Data analysis for the focus group phase of the research is in process. Tapes have been transcribed. Comments from participants are being analyzed using a coding system based on participant needs, trends, and interest in mass customization delivery systems, options and retail possibilities. To achieve consensus reliability of the analysis, four independent coders are involved in coding major concepts and key words and in highlighting natural language of participant comments found in each of the seven focus group transcriptions. Statistical analysis of the data from the questionnaire and sticker projects initially involved simple frequencies and percentages. 22 National Textile Center Annual Report: November I996 A95-1913 Evaluation of Market Turbulence Another phase of the research adapted Pine’s (1993) Market Turbulence Map and Variety and Customization Profile to benchmark the level of market turbulence currently exhibited by the apparel industry relative to that of a decade ago. Pine (1993) focused attention on the achievability of mass customization in his book Mass Customization: The New Frontier of Business Comoetition. His work was based on the notion that the degree of market turbulence exhibited by a company could be used as an indicator of the need for a company to embrace the emerging manufacturing strategy of mass customization. Pine developed a survey to map market turbulence establishing a benchmark indicator for a number of industries including telecommunications, automotive, defense, information technologies, and commodities. This project approached the evaluation of market turbulence by interviewing experts in the industry. The experts were selected from Bobbin’s list of top apparel manufacturing companies. Seven experts from three companies were interviewed to establish a benchmark for the level of market turbulence in the apparel industry. Consumer Co-design Profile In a third phase of the project, researchers investigated consumer’s relationships to components of apparel design including color, fabric and pattern, style and detail, and wardrobe coordination in both a traditional shopping scenario and in a mass customization environment. The traditional shopping scenario asked respondents to indicate the degree of agreement or disagreement as measured by a Likert type scale with a series of questions adapted from Zaichkowsky’s (1985) Personal Involvement Inventory (PII) which was designed to measure consumer’s interest, pleasure, sign, risk importance and risk probability in relationship to various constructs. Constructs examined in traditional shopping involved of the variables of color, fabric and pattern, style and detail and wardrobe coordination base. To determine respondent’s interest in mass customization, participants were shown a series of slides on color, fabric and pattern, style and detail and wardrobe coordination. Participants were told to imagine they could create one-of-a-kind clothes made in their size and at about the same price as ready-to-wear. They were asked to record actual color, fabric and pattern, style and detail and coordinated wardrobe items indicating their selection on the questionnaire. After this exercise they responded to the same PI1 used in the traditional shopping evaluation to indicate their interest in each of the mass customization scenarios. Tools used to profile consumers included demographics, an innovativeness scale and a visualization/verbalization scale. Data are being analyzed using descriptive statistics correlation and analysis of variance. National Textile Center Annual Report: November 1996 23 A951 9/4 SUMMARY OF FINDINGS Focus Groups A total of seventy female shoppers who had purchased better ladies sportswear in the past six months were interviewed in one of the seven focus groups. Participants in focus groups were divided into five groups that were held in the urban setting of Atlanta. Groups were divided along age lines and into groups that were computer literate and non-computer literate. One urban focus group was design to investigate the shopping habits and interest in mass customization options of on-line users. Researchers also included focus groups with a student group and an urban group located in West Alabama. Preliminary analysis of the questionnaire indicated that participants in this group liked to shop for themselves. Only 8.6% indicated that they either disliked shopping or were neutral about shopping for themselves. However, 54.3% of the group made less than five shopping trips per month to purchase apparel for themselves. Thirty-seven (37.1) percent purchased apparel for themselves fewer than 3 times per month with fifty-nine (58.6) percent spending on an average monthly basis less than $150. Participants primarily shopped specialty stores like The Gap and Limited, larger specialty stores like Saks, Parisian, and Lord and Taylor, national department stores like J.C. Penney and Sears and off-price stores like T.J. Maxx and Loehmann’s more than local, family-owned apparel stores, catalogs, direct sales or television. Fifty six (56.5) percent had actually owned custom apparel. Custom dresses, skirts, jackets and eveningwear were the primary categories of custom apparel previously purchased by participants. After exposure during the focus groups to various scenarios for delivery of customized apparel, respondents completed two sticker projects. On one sticker project participants were requested to design an ideal shopping experience for better ladies sportswear by indicating the kind of customization preferred for each of several apparel categories. Respondents preferred custom design for suits/jacket, dresses and evening/formal wear. Custom fit was important in designing an ideal shopping experience for swimwear. In a second sticker project respondents were asked to indicate which attributes like price, fabric, color, etc. were most important in shopping in stores, catalogs, by television, computer or kiosks. Respondents indicated that price and fit were most important in shopping in stores. Speed of delivery was most important in shopping catalogs. Quality was most important in shopping through television. Fit and price were important in computer shopping and quality, fit and price were important in making shopping decisions at kiosks. Description of Market Turbulence Sample To maintain confidentiality, the three companies included in the study were each 24 National Textile Center Annual Report: November 1996 labeled with a letter, Company A, Company B, and Company C. Company B was chosen to be studied in depth. Responses from the experts from the four divisions of Company B made a total sample size of 6 subjects from which to solicit information. Respondents to the survey were predominately from the apparel product category of sportswear. Company A has been an importer and wholesaler of women’s sportswear since 1973. They sell all-cotton and cotton blend woven sportswear and knit sportswear to retailers. Their garments retail between $10 and $35 per item. About 93% of the garments sold by Company A are manufactured abroad because of lower labor costs (Form 10-K, 1995). The respondent interviewed was the President of this company. Company B, founded in 1902, is a vertically integrated international designer, manufacturer, and marketer of leisure apparel, activewear, licensed sports apparel, athletic uniforms, better knit shirts, and a extensive line of lightweight yarn-dyed woven fabric. Price points vary according to sales divisions and subdivisions. Company B expects sales increases to surpass 35 percent annually well past 1996 (Corporate Report B, 1995). The four respondents interviewed for this study were all Division Presidents. Started in 1971, Company C designs, manufacturers, and markets quality men’s activewear, sportswear, outerwear, robes, and furnishings. They operate 28 factory outlet stores and two flagship stores. Company C sells their products at a higher price point than the other two participating companies (Moody’s, 1995). The Vice President and Chief Administrative Officer of Company C was interviewed for this research. National Textile Center Annual Report: November 1996 25 A9561 916 Market Turbulence Information for All Respondents in Sample Market Turbulence Map - All -*Price Competition vs. Product Differentation Necessities vs. Luxuries -. Low vs. High Fashion/Style Consciousness -’ Certain vs.Unc&ain Needs 8 Wants Level of Economic Cycle Dependence Stable vs. Unstable Demand Levels Long vs. Short Product Life Cycles -’ -’ -. -. 1984 . - 1994 Homogeneous vs. Heterogeneous Desires -’ Vulnerability to Substitutes -. Low vs. High Saturation Levels -. Low vs. High Service Levels -. Low vs. High Rate of Technology Change -. Low vs. High Price Consciousness -’ Low vs. High Buyer Power -’ Low vs. High Quality Consciousness -. Slowly vs. Quickly Changing Needs 8 Wants -. Low vs. High Competitive Intensity --_ 0 Low I 25 I 50 I 75 Degree of Market Turbulence High 100 Figure 1 Mean Results of Each of the Seventeen Factors The mean results of each of the seventeen market environment factors from all six respondents are given in Figure 1. As seen from the map, the market turbulence for the average business unit increased between 1984 and 1994. Averaging the seventeen factors together for 1984 generates an average market turbulence of 44. The respondents perception of market turbulence increased to 67 in 1994 for an increase of 24 points. The business unit with the largest increase (a licensed product division of Company B) observed its turbulence increase 50 points, from 28 to 78. The business unit with the smallest increase (Company C) noticed its turbulence rise only 10 points, from 58 to 68. 26 National Textile Center Annual Report: November 1996 A957l9l7 Market Environment Factors I Saturation Levels Buyer Power Product Life Cycles Competitive Intensity Rate of Need/Want Change Heterogeneity of Wants Fashion/Style Consciousness Substitutes Price Consciousness Service Levels Certainty of Needs Quality Consciousness Demand Levels Economic Cycles Rate of Technology Change Necessities/Luxuries I I I I I 1984 28 28 44 55 45 33 46 33 54 51 38 52 52 44 39 49 I I I 1994 82 63 78 88 77 64 75 62 78 75 I I I Change 54 35 34 33 32 31 29 29 24 24 I-I 61 71 70 58 I I 23 19 18 14 I 53 49 I 14 0 Price vs. Product Competition 50 42 -8 Table 1 Mean Survey Results: Individual Factors Ranked by Increased Turbulence Table 1 ranks each of the single factors based on means by their average change since 1984. While 15 factors increased in turbulence, one factor remained unchanged while one factor, product differentiation towards price competition (50 to 42), actually decreased, . Pine (1993) suggested that a company with a change in turbulence over a ten-year period that is greater than or equal to 10 should consider that their entity is currently undergoing the paradigm shift to mass customization. The average means of all respondents on the 17 market environment factors indicated that 15 factors increased over 10 points. This sets a benchmark for the apparel industry and indicates a strong need for respondents in this survey to consider a change in business strategy. National Textile Center Annual Report: November 1996 27 A9581 918 The average variety and customization profile for all of the subjects is given in Figure 2. The factors of amount of variety, future variety, customization level, and future customization were all on the same type scale on the questionnaire. For each factor, a score of 50 meant that factor had stayed the same from 1984 to 1994. A score of 0 or 100 denoted much less or much more of that particular factor, respectively. Based on the information in Figure 2, there has been more variety and customization in the apparel industry, more specifically the sportswear area, since 1984. This is a trend these experts project to continue. However, in both cases of variety and customization, they project a lower level than the present level. According to Pine (1993) the increases in variety and customization are usually the consequence of a succession of individual decisions that the company’s managers make to handle the increased turbulence that they confront in their market environment. Amount of Variety Future Variety Extent Customized Extent Customizable Customization Level Gture Customization 0 20 40 60 80 100 Figure 2 Mean Variety and Customization Profile For All Respondents 28 National Textile Center Annual Report: November 1996 A9581 919 Table 2 gives the mean market turbulence measures for all of the research participants, ranked by the turbulence in 1994. Company Company A Company C Company B 1984 53 58 38 1994 79 68 64 Change 25 10 26 24 67 44 All Companies Table 2 Average Market Turbulence Measures For All Research Participants Company A had the highest turbulence in 1994 (79) and had the second highest overall change (25) since 1984 indicating their market environment has been turbulent for some time. Company C, however, had the second highest turbulence (68) in 1994 but had the lowest overall change (10). Extent Customized Extent Customizable Closed vs. Open Discontinuous vs. Continuous Same-Use/ModifiedUse/Different-Use Figure 3 Product Customization Profile for All Respondents Figure 3 exhibits the product customization profile for all six respondents based on average means for all respondents. In the questionnaire, the subjects were asked to rank these factors on a scale from 0 to 100: 1) To what extent are your products customized to each consumer? 0 being not at all, 100 being 100% customized, or somewhere in between. 2) To what extent are your products customizable by individual consumers? 0 being not at all, 100 being 100% customizable, or somewhere in between. National Textile Center Annual Report: November 1996 29 3) To what extent are your products “closed customization” (the business unit has to perform customization) or “open customization” (the consumer can perform any or all customization)? 0 being totally closed and 100 being totally open. 4) Where do your products fall between “continuous customization” (products can be infinitely customized) and “discontinuous customization” (there are discrete steps in the level of customization)? 0 being totally continuous and 100 being totally discontinuous. 5) Where do your products fall between “same-use customization” (products perform exactly the same use after customization), “modified-use customization” (they can perform different but related functions), and “different-use customization” (products perform completely different functions)? 0 being same-use, 50 being modified-use, and 100 being different use. Analysis of Figure 3 shows that, for all six respondents, products were heavily weighted on same-use customization with middle range responses for extent customized, extent customizable, open vs. closed customization, and continuous ve. discontinuous. Consumer Co-design Profile Data were collected from 242 male and female students in an Art for Living class in the Department of Consumer Affairs. Data analysis is currently in process. REFERENCES: Davis, S. M. (1987). Future Perfect. Reading, MA: Addison-Wesley. Pine, B.J.II. (1993). Paradigm shift: Mass customization: The new frontier in business competition. Boston, MA: Harvard Business School Press. Zaichkowsky, J.L. (1985). Measuring the involvement construct. Journal of Consumer Research, 12, 341-52. DISSERTATION/THESIS TOPICS: Peavy, Karla. (1996) An evaluation of market turbulence in the apparel industrv. Unpublished masters thesis, Auburn University, Auburn, AL. Gao, Shuo. (In Process) The consumer as co-desianer in mass customization: Artistic ability. interest, and self-confidence in desian. Unpublished master’s thesis, Auburn University, Auburn, AL. Biedron, Melissa. (in Process) Consumer perception of time relative to the mass customization process. Unpublished master’s thesis, Auburn University, Auburn, AL. Wu, Weifang. (In Process) A study of female career-oriented consumers’ involvement in computer generated custom designed clothing. Unpublished master’s thesis, Auburn University, Auburn, AL. O’Mara, Kevin. (In Process) Mass customization: The next manaoement paradigm? Unpublished doctoral dissertation, North Carolina State University, Raleigh, NC. INDUSTRY CONTACTS: Bowden, Friedman Associates, Kurt Salmon Associates, American Apparel Contractors Association, Manifold Graphics, Diamond Technology WEB SITE: www.auburn.edu/mcrp.htmI 30 National Textile Center Annual Report: November 1996